One of the functions of the Fed is to use monetary policy, which involves changes in the money supply and changes in interest rates to affect aggregate spending, to lessen the impact of economic fluctuations on the economy.

Question

Quizplus · Accepted Answer

This statement is true. One of the primary functions of the Federal Reserve (the Fed) is to use monetary policy tools to stabilize the economy and lessen the impact of economic fluctuations. Monetary policy is the process whereby the Fed manipulates the money supply and interest rates to influence aggregate spending and economic growth. By raising or lowering interest rates and increasing or decreasing the money supply, the Fed can control inflation, promote economic growth, and stabilize financial markets.

One of the Functions of the Fed Is to Use